"First of all it is old technology and certainly that plays into the CPRS issue," he said.

"But it's also very far away from the markets it serves so the transport issues and transport costs have a big impact on our ability to get our product to the market in a cost effective way."

The Federal Opposition says Cement Australia's decision bears out its warning about the impact of the emissions trading scheme.

Climate Change Minister Penny Wong has told the Senate a 25 per cent drop in demand for cement and the global recession contributed to the company's decision to close the plant.

"Under the Carbon Pollution Reduction Scheme, clinker production, which is obviously the most emissions intensive activity in the cement processing sector, would be eligible for some 94.5 per cent of free permits, and of course as a result of other policy decisions the Government has made the scheme doesn't commence until 2011," she said.